Blue chips in London, Paris and Frankfurt opened lower on Monday as UK Chancellor Rachel Reeves failed to lift the mood in the UK with her China trip, amid a modest investment deal.
‘Surprise! The US economy added more than [250,000] new nonfarm jobs in December, some [90,000] more than expected, and the unemployment rate fell to 4.1%,’ explained Swissquote’s Ipek Ozkardeskaya. ‘If it’s any comfort for the Federal Reserve doves: wage growth softened from 4% to 3.9% on a yearly basis. But all in all, the report looked very strong.’
‘That’s excellent news for the US economy...But that’s not necessarily good news for the market, as the strength of the US jobs data further dashed the dovish Fed expectations...The probability of no rate cut from the Fed in May spiked to 67% in the aftermath of the data release, and the probability of a June cut is close to a coin flip.’
The FTSE 100 index opened down 25.85 points, 0.3%, at 8,222.64. The FTSE 250 was down 27.02 points, 0.1%, at 19,706.92, and the AIM All-Share was down 0.14 points at 713.24.
The Cboe UK 100 was down 0.3% at 824.07, the Cboe UK 250 was down 0.2% at 17,150.40, and the Cboe Small Companies was up marginally at 15,275.53.
GSK opened 0.8% lower.
The pharmaceutical FTSE 100 constituent has agreed to acquire Boston-based biopharmaceutical firm IDRx, which is working to develop precision therapeutics to treat gastrointestinal stromal tumours for up to $1.15 billion.
GSK will pay $1 billion upfront followed by a possible further $150 million success-based regulatory approval milestone payment.
On the FTSE 250, Oxford Nanopore soared 22%.
The developer of nanopore sequencing products reaffirmed its medium-term guidance, saying it expects over 30% revenue growth at constant currency.
Also, it said it expects to reach adjusted Ebitda breakeven in financial 2027 and to become cash flow positive the year after that. For the time being, it said it remains well-capitalised with around £403 million in cash.
PageGroup fell 3.6%.
The recruitment firm reported a fourth-quarter gross profit of £196.7 million, down 17% on-year from £237.5 million. For the full year, gross profit fell 16% to £842.5 million from £1.01 billion. The firm noted continued subdued levels of client and candidate confidence.
It said it expects a full-year operating profit in the lower end of its consensus range, of between £49 million and £58.5 million, adding that a high degree of uncertainty remains across most of its markets.
Further, PageGroup revealed it has reduced its team of headhunters, due to market uncertainty in the European job market.
The company said it reduced its fee earner headcount by 130, or 2.4%, standing at 5,370 in the fourth quarter of 2024, compared to 5,500 in the third quarter.
In smaller caps, Orosur Mining gained 8.7%.
The minerals explorer and developer, with operations in Colombia, Argentina and Nigeria, reported ‘exceptional results’ from three holes at the Anza gold project in Colombia.
Those results, Orosur said, include 6.01 grammes of gold per tonne of ore at surface from PEP018.
Georgia Capital lost 0.9%.
The Georgia-focused investor addressed a report from Radio Liberty Georgia last week, which it says speculated that certain members of the US House of Representatives have sent a letter to the new US administration calling for action against a list of 25 individuals including Georgia Capital’s Chair & CEO Irakli Gilauri. This was ‘in relation to recent political events in Georgia’.
It responded: ‘Mr Gilauri leads the company in upholding the highest standards of corporate governance. We have a broad stakeholder base, and our policy has always been to not involve the company in the country’s political process.’
In European equities on Monday, the CAC 40 in Paris was down 0.4%, while the DAX 40 in Frankfurt was down 0.5%.
The pound was quoted at $1.2153 early on Monday in London, still lower compared to $1.2200 at the equities close on Friday.
‘On the face of it then, [Chancellor Rachel] Reeve’s weekend trip to China, resulting in news of only a modest investment deal, doesn’t appear to have changed the mood music regarding the UK fiscal woes,’ Lloyds analysts said.
At meetings on Saturday, Reeves hailed her trip - during which she met Chinese Vice President Han Zheng and Vice Premier He Lifeng, in the first high-level economic meeting between Britain and China since 2019 - as a ‘significant milestone’ in Labour’s re-engagement with China, saying she had agreed deals worth £600 million to the UK economy over the next five years.
The euro stood lower at $1.0223, against $1.0233. Against the yen, the dollar was trading lower at JP¥157.59 compared to JP¥157.81.
In Asia on Monday, Japan’s financial markets were closed to mark Respect for the Aged Day. In China, the Shanghai Composite was down 0.3%, while the Hang Seng index in Hong Kong was down 0.9%. The S&P/ASX 200 in Sydney closed down 1.2%.
This weakness in China was despite new that China’s exports surged to a record high in 2024, providing a much-needed boost for the economy as the prospect of biting tariffs imposed by US president-elect Donald Trump looms.
‘In 2024, China’s total exports exceeded ¥25 trillion for the first time, reaching ¥25.45 trillion [$3.47 trillion], an increase of 7.1% year-on-year,’ Lu Daliang, spokesman for the General Administration of Customs, said. Total imports, meanwhile, rose 2.3% to ¥18.39 trillion.
Combined trade swelled 5% to reach a record ¥43.85 trillion, said Wang Lingjun, vice minister of the customs administration.
In the US on Friday, Wall Street ended lower, with the Dow Jones Industrial Average down 1.6%, the S&P 500 down 1.5% and the Nasdaq Composite down 1.6%.
Brent oil was quoted higher at $80.64 a barrel early in London on Monday from $78.61 late Friday.
‘Given the natural link between oil prices and the inflation expectations component of bond yields...it is hard to argue this development is [UK] gilt friendly either,’ Lloyds said. ‘In other words, the government’s sensitivity to bond yields, caused by the very narrow initial margin of fiscal headroom set at the Budget, still looks like a dominant theme at the start of the new week.’
Gold was quoted lower at $2,687.25 an ounce against $2,690.05 on Friday.
Still to come on Monday’s economic calendar, the US releases consumer inflation expectations and the monthly budget statement.
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